Sportingbet and Empire

[midas]

Sportingbet confirms Empire approach
by Brian Cattell Posted 04:42 EST, 5, Sep 2005

Online gambling operator Sportingbet plc Monday, Sept. 5, emerged as the mystery suitor behind a £790 million ($1.45 billion) takeover approach to gaming services provider Empire Online plc.
Sportingbet’s announcement follows a statement by British Virgin Islands-based Empire Online last week in which it revealed that it had received an approach but declined to disclose the identity of the potential bidder.

Initially, most analysts of the nascent Internet gaming sector believed that the approach had been made by Empire’s far larger rival, Partygaming plc, with which it has a commercial agreement. However, press reports over the weekend identified Sportingbet, which is listed on London’s Alternative Investment Market, as the bidder and forced the company into making a statement.

Sportingbet warned that the talks are still at a very early stage and said there is no guarantee that a formal offer will be forthcoming. The company added that making an offer would be subject to the satisfaction of certain material pre-conditions and would depend on satisfactory due diligence at Empire Online.

Empire Online only listed, also on AIM, in June this year but already the approach from Sportingbet values it at more than 50% above its market capitalization at the time of its initial public offering. The prospect of a deal, which Empire Online has said could be structured as a cash and stock transaction, underlines the growing interest in the Internet gambling sector.

Following Sportingbet’s approach to Empire Online, analysts have not ruled out the prospect of a bidding war for the company that could draw in Partygaming and Cassava Enterprises, another large gaming company that operates the 888.com online casino.

Empire Online does not operate its own games but instead makes money by directing its customers to large operators such as Partygaming and 888.com. If Empire Online is snapped up by Sportingbet then both Partygaming and 888.com face losing significant amounts of customers, a consideration that could yet prompt them to enter the bidding fray.